Telekom Austria AG

euro adhoc: Telekom Austria AG
Mergers - Acquisitions - Takeovers
Telekom Austria Group Acquires 70% Stake in Belarusian Mobile Operator MDC for 5.9x08E EBITDA (Ad-hoc)

-------------------------------------------------------------------------------- Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement. -------------------------------------------------------------------------------- Company Information 03.10.2007 Vienna, October 3, 2007: The Telekom Austria Group (VSE: TKA, OTC US: TKAGY) today announced that it has agreed to acquire a 70% stake in Cypriot SB Telecom Limited held by Mr. Ead Samawi and his partners for a corresponding enterprise value of approximately EUR 730* million, subject to approval by the relevant antitrust authorities. SB Telecom is the sole owner of the Belarusian mobile operator MDC. The transaction values MDC at approximately 5.9x08E EBITDA. Furthermore Telekom Austria Group has also entered into a call and put option agreement related to the remaining 30% stake exercisable in the fourth quarter 2010 for approximately EUR 320* million. Mr. Ead Samawi will remain chairman of SB Telecom Limited, all executive management positions in SB Telecom and MDC will be nominated by the Telekom Austria Group, which will have full operational control. Telekom Austria Group will acquire the stake in SB Telecom through a subsidiary of its mobile communication arm, mobilkom austria. Telekom Austria Group has also agreed on a performance based deferred consideration. The amount of the deferred consideration, which is payable in the fourth quarter 2010, will be directly linked to the future financial performance of MDC and may increase the enterprise value to 6.5x10E EBITDA. In return, the Telekom Austria Group has full access to the free cash flow and dividend distributed. "The acquisition of MDC is the consistent execution of our strategy for profitable growth in Eastern- and South-Eastern Europe, it offers us an entry to the attractive telecommunication market in Belarus while the terms of the transaction once again underline our disciplined approach to expansion. After the successful integration of the highly profitable Bulgarian market leader Mobiltel we once again engage in a similar transaction and increase our addressable market by approximately 30% to 44 million inhabitants in the countries Telekom Austria Group is present", says Boris Nemsic, CEO of Telekom Austria Group and CEO of mobilkom austria. MDC, which markets its mobile communication services under the brand names "Velcom" for postpaid services and "Privet" for prepaid services, is the number 2 operator in Belarus with a market share of approximately 42% and more than 2.7 million customers in a market that reached a penetration of 66% as of June 30, 2007. For 2006, the company generated revenues of approximately EUR 263*** million and EBITDA of approximately EUR 159*** million. The net income for the period was approximately EUR 83*** million. The acquisition of the 70% stake in SB Telecom Limited will be financed using existing credit facilities. "We have sufficient financial headroom to fund the transaction with existing credit lines and expect no negative influence on our current rating. As the strong free cash flow allows for rapid deleveraging we will resume our share buy back program once we have reached the level of 2.0x net debt/EBITDA", states Hans Tschuden, CFO of Telekom Austria Group. The acquisition is accretive on earnings per share from 2008 on and will have no impact on Telekom Austria Group´s stated dividend policy of distributing 65% of net income. Operational information on MDC** 2006 2005 2004 Market share 42.5% 46.0% 46.6% Mobile Subscribers (in 000) Postpaid 2,361.9 1,882.1 1,135.0 Prepaid 124.3 0.0 0.0 Total Subscribers 2,486.2 1,882.1 1,135.0 Financial information on MDC** 2006*** 2005*** 2004*** in EUR million Revenues 262.6 199.4 133.5 EBITDA 158.8 117.2 76.4 EBITDA Margin 60.5% 58.8% 57.2% Depreciation & Amortization -45.0 -42.3 -36.0 Operating income 113.8 74.9 40.5 Net income 82.8 56.7 30.9 Capex 76.1 75.9 41.7 Capex/Sales 29.0% 38.1% 31.2% * The transaction is denominated in USD and MDC also reports in USD. USD have been converted into Euro using an exchange rate of 1:1.42, the prevalent exchange rate on October 1, 2007. ** Sources: Company data; financial figures according to IFRS provided by company *** The transaction is denominated in USD and MDC also reports in USD. All historical USD amounts have been converted into Euro using the average exchange rates for 2004 of 1:1.25, for 2005 of 1:1.24 and for 2006 of 1:1.27. end of announcement euro adhoc 03.10.2007 06:28:00 -------------------------------------------------------------------------------- ots Originaltext: Telekom Austria AG Im Internet recherchierbar: Further inquiry note: Peter E. Zydek Head of Investor Relations Tel.: +43 (0)59059 1 19001 mailto: Elisabeth Mattes Telekom Austria Group's Spokeswoman Tel.: +43 (0)664 331 2730 mailto: Branche: Telecommunications Equipment ISIN: AT0000720008 WKN: 555750 Index: WBI, ATX Prime, ATX Börsen: Wiener Börse AG / official dealing

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